New mortgage pays off old mortgage?

gclarke34

Hi all,

Sorry if this is a bit of a naive question, but I'm actually struggling to find simple explanations online.
I am in the process of selling and buying a more expensive property. I have a mortgage on my current property and the fixed rate ended last month, I have no ERC now.

When I move house, does my new mortgage pay off my current one, meaning I'll have a single mortgage with the new product?

People I have spoken to (non mortgage professionals) tell me I will have two mortgages and the 'new mortgage' will only be the difference between my existing mortgage and what I need for the new property.. I thought this was only if I ported my existing one and got a 'top up' mortgage?

Thanks

G_M

You cannot sell a property with a mortgage attached to it. Your buyer will not want your mortgage!

So when you sell, you must pay off your existing mortgage.

To do this, you take out a new one - part of which will pay off the existing mortgge and part will be used to pay for your new, more expensive, home.

gclarke34

Thank you G_M for the reply, this is what I had thought.

However, will this will happen simultaneously i.e. on the same day? Or do I effectively have to get the new mortgage (which would take my current mortgage as a monthly outgoing) and then pay off the old new once I've started the new one?

AH1509

When you sell your property, the amount of mortgage left, solicitor fees and EA fees will be deducted before any final monies due to you. This for most is what makes up all or most of the deposit for the new property and the remainder would be through a mortgage that you gain based on your current financial situation.

For eg. You sell your property for £100,000.
You have £60,000 still left on your mortgage. Your solicitor will request a redemption certificate from your lender and clear this upon the completion of your sale. Minus £1500 for legal fees and £2,000 EA fees you are left with £36500 towards the deposit of your new more expensive property.

You may have more savings to add to this deposit and then you use this amount with your current AIP to determine what new property is affordable.

Hope this helps.

G_M

gclarke34 wrote: »

..

However, will this will happen simultaneously i.e. on the same day?

Yes.


Asuming you are using a conveyancer for th sale and purchase, he will arrange it al.

SG27

The new mortgage doesn't pay off the old mortgage, the money from the sale of the house does. You then take out a new mortgage on the new property. This all happens on the day of completion.

You would only have two separate mortgage parts if you ported your old mortgage deal to your new property and borrowed more. So you would have one part at your old rate and another part on a new rate/deal

aries_163

YOUR new mortgage doesn’t pay off anything from your current one. Your buyers mortgage does that surely?? Buyers apply for a mortgage, funds come from their lender to your solicitor, your solicitor redeems your mortgage with these funds.
If you are buying a new house simultaneously, then your solicitor will get the funds from your lender to pay your vendor.
You are correct with your thoughts on porting. If you choose a new lender/ new product then you will only have 1 mortgage account.